CBS/Dish Deal Could Make Moonves' AutoHop Battle Tougher

The path for CBS chief Leslie Moonves’ efforts to thwart Dish Network’s AutoHop seemed easy enough. Moonves could simply threaten Dish in a carriage negotiation to abandon the
commercial-skipper or else CBS would keep the stations it owns off the satellite operator.

But, the chance for CBS to exert that leverage and control its destiny, as it were, appears to be off
the table for a good while. Instead, Moonves and CBS look to be at the mercy of the federal courts.

According to court papers, CBS inked a carriage (or retransmission consent) deal with Dish
in January. Four months later, Dish launched the AutoHop.

Oh, how, CBS wishes it had a negotiation coming up. It’s not clear how long the deal with Dish goes for, but those types of
arrangements tend to last a few years.

But CBS is hoping with the AutoHop, a New York federal court will find Dish guilty of breaching their January retransmission consent contract and issue
an injunction. In court papers filed Oct. 12, CBS accuses Dish of violating the “implied covenant of good faith and fair dealing.”

The Dish Hopper DVR records much of the
prime-time programming on the Big Four networks and the AutoHop functionality launhed in May allows a user to automatically remove commercials, when watching in time-delayed fashion.

CBS says
in court filings that its deal with Dish was made with a “mutual understanding” that CBS would receive advertising dollars in exchange for giving Dish the rights to offer its
owned-and-operated station portfolio.

With a degree of obviousness, CBS says that if Dish had asked to offer programming “with all commercials automatically removed … that would
have fundamentally altered the basic economics and nature” of the deal.

Which is in line with comments Moonves made last month saying: “We cannot produce an episode of a show for
$3.5 million and have the people at Dish say: ‘We can pull out the commercials.’ That’s not how the ecosystem works. If they want to continue down that line, then we will just not be
on Dish.”

Both ABC and NBCUniversal have also charged Dish with violating retransmission consent deals on similar grounds. ABC’s deal dates to 2005 and NBCU’s to 2008. Those
arrangements could expire before CBS's deal, giving them a chance to work towards some sort of elimination or, more likely, refashioning of AutoHop.

Charges that Dish is breaching retrans
deals come in conjunction with the broader litigation CBS, ABC, Fox and NBC are pursuing against Dish, charging it is engaged in copyright infringement.

Dish denies it is in violation of the
CBS, ABC or NBC retransmission consent deals with the AutoHop in its court filings. It broadly says that the matter “ultimately” is about allowing “freedom of consumer choice,
individual families’ choice to elect, if they want, to time-shift their television viewing and watch recorded television without commercials.”

Dish also says AutoHop does not have
commercials “erased or deleted.” Instead, “they remain on the recording and can be readily viewed at each customer’s individual option.” Also, AutoHop does not
“alter or modify the broadcast signal.”

The major networks feel much of their business could be more than altered. Moonves has said he doesn’t think AutoHop will ultimately
survive. But his role in making that prediction come true would seem to be diminished since the CBS deal with Dish is in the rearview mirror. Then again, he always holds a lot of sway.